MoviePass: Netflix in Real Life

With content like Stranger Things and Manchester by the Sea gaining in popularity and acclaim seemingly every day, it seems that big tech has infiltrated Hollywood in creeping and increasingly larger ways. Through the rise of Netflix and Hulu, binge watching habits, constant availability, and the comfort of home have not only altered the experience of media and movies in numerous ways, but become more pervasive as time passes. Yet, some people cherish the experience of cinema and regret its seemingly inevitable demise - enter MoviePass!

MoviePass, founded in 2011, offers a $10 per month subscription service that allows customers to watch one movie per day at any movie theater across the country. Once signed up, you’re sent a MoviePass debit card loaded with cash when you’re near a movie theater just before you select your daily showing on an app on your phone. You then pay for the ticket with the card and are good to go! At this monthly price, going to see just one movie per month makes sense for the consumer. This may all sound too good to be true, but there are some caveats. First, special screenings with 3D, moving seats, etc. are excluded from the MoviePass subscription. Second, MoviePass takes a financial loss when users start going to the theaters more than once a month. However, their key assumption is that with enough customers, they will have a consistent stream of cash while initial movie watching splurges will fall. If this unlimited subscription service sounds familiar, it might just be because the CEO of MoviePass since 2016, Mitch Lowe, was a co-founder of Netflix and former president of Redbox.

As a Netflix co-founder, Mitch Lowe may seem a strange pick for MoviePass as its CEO; however, he articulates his belief that the movies still have a place in modern society and how much more social they are. When people go to the movies, they are doing so with their families and friends, which often doesn’t happen when binging shows at home on Netflix or Hulu. Lowe argues that this social aspect has a strong attractive force. He also discusses how creatives in the film industry make films with the intention of them being viewed on the silver screen with stellar sound systems. These features currently are not replicable with a home theater system.

Although Lowe built his career challenging the movie theater industry, he now sees a way to integrate the declining movie industry with the modern, technological world. The leadership of MoviePass envisions their service driving demand for movie theaters, even though their main demographic is millennials, which is quite a difficult demo for the theaters to attract. This vision culminated when, in August 2017, through the entrance of a new majority stakeholder, MoviePass was able to lower their subscription price for unlimited movies from $40 to $10, which led to subscriptions rising from $20,000 to now $2.5 million in under a year. Also, because users cannot have the same confirmation for movie seating, MoviePass users are going to movies at off-peak hours and filling seats at theaters that would normally be empty at those times.

While MoviePass certainly has its fair share of work cut out for it in trying to prove a new business model, there clearly still exists demand for moviegoing, and MoviePass users do go to the movies almost twice as much as standard moviegoers; this also leads to increases in purchases of concessions and spending in the local area with restaurants. While large theater chains like AMC might find this model unstainable, Lowe and the rest of the company continue to trailblaze, and they are currently imagining creating an analytics division to get a sense for consumers’ preferences and can target advertising. Next time you sit down to binge watch “The Office” for the 15th time, consider going to the cinema with MoviePass instead - you might just enjoy it!

Sources: Variety, Recode, Bloomberg